Whether you’re thinking of buying a house, apartment, or other property, for the majority of people, the reality of purchasing property means securing a mortgage. And with mortgage fees, solicitor payments, and transfer tax, keeping your repayments as low as possible is important for affordability in the long run.

From 2014 to 2019, the mortgage interest rates in Finland dropped from 1.69% to 0.73%. That’s almost a 1% drop in just 5 years. Whilst that was part of an overarching trend of falling mortgage rates across Europe, it has continued into 2020 and is still dropping in Finland. But what does this mean for the housing market in Finland, and should you expect the drop to halt?

Securing a mortgage

A home loan, or a mortgage, in principle, is a loan taken out to buy a property or land. Rather than putting down any collateral, the loan is secured against your home, so until your mortgage is paid off, your property could be repossessed if you do not meet your payments. 

Therefore, before applying for, and securing, a mortgage, it’s important to factor in all costs to know if you can afford the payments. One of these additional costs that need to be considered is the interest on your mortgage payments. All lenders have their own interest rates that compound each month to increase the overall amount that you owe. So, you need to consider the interest rate of your lender before signing up for your mortgage.

Reduced rates in Finland

Luckily for homeowners or potential new buyers in Finland, mortgage rates across the country have been dropping steadily over recent years, with some even predicting that they could reach 0%. And that’s not as out of reach as you may think. In fact, in 2019, a Danish bank called Jyske Bank offered a 10-year fixed-rate mortgage with an interest rate of negative 0.5%. So, it’s not as inconceivable as it may seem for Finnish banks to drop their rates to zero.

Securing a mortgage

As well as factoring in the costs of your mortgage, interest rates, and any associated fees, the main cost of buying a property is the initial deposit needed to secure a mortgage. For the majority of buyers, the maximum loan-to-value percentage they can obtain is 85%. Meaning if you want to purchase a home in Finland, you need to save 15% of the property price in order to get the mortgage needed for the rest. The only exception for this rule is if you are a first-time buyer, where you can secure a 95% mortgage, leaving you just 5% to save for the deposit.

The time is now

If you’ve been thinking about purchasing your first home, relocating or re-mortgaging your property, there’s no better time to do so than with the mortgage rates continuing to fall. In other words, if you want to get a mortgage in Finland, be sure to get your applications in as soon as possible to make the most of the low-interest rates.